Arian Silver's MD&A and Results for the Three Months Ended 31 March 2014
May 16 2014 - 2:00AM
Marketwired Canada
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES NOR FOR DISTRIBUTION IN THE
UNITED STATES
Arian Silver Corporation ("Arian Silver" or the "Company") (AIM:AGQ)(TSX
VENTURE:AGQ)(FRANKFURT:I3A), a silver exploration, development and production
company with a focus on projects in the silver belt of Zacatecas, Mexico,
announces today the release of its Management's Discussion and Analysis ("MD&A")
and unaudited Financial Statements ("Financials") for the three months ended 31
March 2014.
The MD&A and audited Financials will be available at SEDAR at www.sedar.com and
on the Company's website at www.ariansilver.com. These documents can also be
obtained on application to the Company. The following information has been
extracted from the MD&A and Financials. The financial information in this
announcement does not constitute full statutory accounts.
The Company's strategy is to:
-- establish a silver mining business capable of sustaining a minimum of
two million ounces of silver per annum plus lead and zinc, and
-- to build shareholder value by expanding silver and base metal resources
on the Company's mining concessions in Zacatecas, Mexico.
The Company has made good progress in the advancement of the San Jose Project in
the first quarter of 2014. Highlights include:
-- Refurbishment of the Plant is near completion and the Plant is on track
to begin commissioning by end 2014.
-- Transportation of the refurbished Plant to the new site has commenced.
-- Installation of a new line to supply grid power to the new plant site is
complete.
-- Pre-construction earthmoving at the new site is complete.
-- Development of a new access ramp into the Soledad section of the San
Jose mine has commenced.
Cash and cash equivalents as at 31 March 2014: $5.0m.
Arian Silver's Chief Executive Officer, Jim Williams, commented today: "Arian
Silver continues to advance its flagship San Jose project with the refurbishment
of the processing plant on track to begin commissioning by the end of 2014; the
site for the refurbished plant is taking shape and we will soon be commencing
the reassembly stage of the process. Our discussions regarding the refinancing
of our debt facility continue positively and I look forward to reporting further
on this in due course."
Financial
Three months Three months
ended ended 31 Mar
31 Mar 2014 2013 Change
$000s $000s $000s
------------------------------------------------
Gross loss (13) (206) 193
Net loss for the period (1,053) (956) (97)
As at As at
31 Mar 2014 31 Dec 2013 Change
$000s $000s $000s
------------------------------------------------
Cash and cash equivalents 4,967 7,241 (2,274)
Total assets 29,454 28,366 1,088
Total assets increased since 31 December 2013 following the continued investment
in the Plant and the development of the San Jose mine, and the capitalisation of
interest for the period. The cash balance reflects the investment in mine and
Plant development together with general working capital spend.
The reduced gross loss between the Q1 2013 and Q1 2014 periods comes as a result
of the Company's switch from production to development. The increased net loss
is primarily on account of the fair value adjustment relating to the derivative
liability (this is explained further in note 7 to the Q1 Financial Statements).
Financing discussions continue to advance positively.
Operations
First First
Quarter Quarter
2014 2013 Change
-----------------------------
Head grade - Ag grams per tonne - 174 (100%)
Tonnes mined 5,739 - 100%
Tonnes milled - 258 (100%)
Silver concentrate tonnes produced - 4 (100%)
Silver ounces produced - 878 (100%)
Silver ounces per concentrate tonne produced - 251 (100%)
REVIEW OF OPERATING PERFORMANCE
----------------------------------------------------------------------------
Q1 Q4 Q3 Q2
2014 2013 2013 2013
----------------------------------------------------------------------------
Head grade - Ag grams per tonne (g/t) - - - 191
Tonnes mined 5,739 8,057 1,816 4,628
Tonnes milled - - - 3,221
Silver concentrate tonnes produced - - - 43
Recovery % - - - 41.42
Silver ounces produced - - - 8,180
Silver ounces per concentrate tonne produced - - - 190
Silver ounces sold - - - 9,058
Silver concentrate tonnes sold - - - 37
Quarter end inventory balances
Mined tonnes stockpile 32,754 27,015 18,958 17,142
Silver concentrate inventory tonnes - - - -
Silver ounces included in concentrate
inventory - - - -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q1 Q4 Q3 Q2
2013 2012 2012 2012
----------------------------------------------------------------------------
Head grade - Ag grams per tonne (g/t) 174 - - 181
Tonnes mined - - 4,072 26,268
Tonnes milled 258 - - 28,903
Silver concentrate tonnes produced 4 - - 298
Recovery % 60.90 - - 58.74
Silver ounces produced 878 - - 98,616
Silver ounces per concentrate tonne produced 251 - - 331
Silver ounces sold - - 8,937 93,112
Silver concentrate tonnes sold - - 32 286
Quarter end inventory balances
Mined tonnes stockpile 17,935 18,192 18,204 15,003
Silver concentrate inventory tonnes 4 - - 36
Silver ounces included in concentrate
inventory 878 - - 11,276
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The Company is in the final stage of the refurbishment of the Plant in-situ, and
has commenced the dismantling and transport of the Plant to the Company's
100%-owned site adjacent to the San Jose mine. A new line to supply grid power
to the new plant site has been installed, pre-construction earthmoving is
complete and a new decline into the Soledad section of the San Jose mine has
commenced.
It is anticipated that the Plant will be commissioned around the end of 2014
with an initial capacity of 750 tonnes per day ("tpd"). The plant will be
subsequently expanded to 1,500 tpd.
Mining and development at the San Jose mine were maintained at a reduced rate
during Q1 2014 as the Company operates a programme of mine development designed
to ensure readiness for the resumption of processing operations.
Subsequent Events
None
REVIEW OF FINANCIAL PERFORMANCE
Summary of Quarterly Results
The Company's focus during the quarter was the ongoing project of the
refurbishment, relocation and construction of the El Bote Processing Plant and
the development of the San Jose mine.
Unaudited 2014 2013
Q1 Q4 Q3 Q2
$'000 $'000 $'000 $'000
--------------------------------------------
Revenue - - - 129
Cost of sales (13) (49) (25) (413)
Gross loss (13) (49) (25) (284)
Net investment income/(loss) 2 1 44 (68)
Net profit/(loss) for the period (1,053) (583) 875 (947)
Basic and diluted
earnings/(loss) per share ($0.03) ($0.02) $0.03 ($0.03)
Total assets 29,454 28,366 27,361 14,582
Total non-current financial
liabilities (190) (187) (185) (182)
Shareholders' equity (14,842) (15,784) (15,717) (13,414)
Unaudited 2013 2012
Q1 Q4 Q3 Q2
$'000 $'000 $'000 $'000
--------------------------------------------
Revenue - 34 136 2,104
Cost of sales (206) (256) (475) (2,242)
Gross loss (206) (222) (339) (138)
Net investment income/(loss) (21) (84) 57 (127)
Net profit/(loss) for the period (956) (1,156) (968) (1,133)
Basic and diluted
earnings/(loss) per share ($0.03) ($0.04) ($0.03) ($0.04)
Total assets 15,154 14,119 14,409 15,021
Total non-current financial
liabilities (186) (177) (175) (172)
Shareholders' equity (13,971) (13,003) (13,464) (13,647)
LIQUIDITY, CAPITAL RESOURCES AND WORKING CAPITAL
At 31 March 2014 the Company had cash and cash equivalents of $5.0m (31 December
2013: $7.2m) and working capital deficiency of $6.9m.
Cash and cash equivalents decreased by $2.3m during Q1 2014 as a result of $1.2m
used in operating activities, $0.5m investment in the purchase and refurbishment
of the El Bote plant, $0.6m investment in mine development at the San Jose mine
and $0.1m foreign exchange loss.
Working Capital - 31 March 2014
As at 31 March 2014, the Company had a net current liability of $6.9m (31
December, 2013: $2.8m). The items of working capital and changes compared to 31
December 2013 are as follows:
Current assets
-- Cash and cash equivalents of $5.0m (31 December 2013: $7.2m).
-- Trade and other receivables of $1.4m (31 December 2013: $1.3m). $0.9m of
the outstanding balance relates to the IVA (government sales tax) debtor
owed to Arian which is in the process of being recouped as well as $0.2m
from Siberian Goldfields.
-- Inventories of $1.1m (31 December 2013: $1.0m) relates to stockpiled ore
held at cost relating to production at the San Jose mine.
Current liabilities
-- Trade payables of $1.0m (31 December 2013: $1.2m).
Capital Resources
Convertible Note
On 29 August 2013, the Company issued a convertible note instrument raising
$15.6m before transaction costs, with Platinum Long Term Growth VIII, LLC. The
instrument is convertible in whole or in part at the option of the note holder
at a conversion price of C$1.10. The Note will mature at a premium of 5% if not
otherwise converted before 29 August 2014. On closing, the Company prepaid the
full interest of 14%. This facility was entered into to fund the purchase,
refurbishment, transportation and reassembly of the Plant, and the development
of the San Jose mine.
Standby Equity Distribution Agreement ("SEDA")
The Company announced on 27 September 2012 it had signed a three year GBP 5m
standby equity distribution agreement with YA Global Master SPV Ltd, an
investment fund managed by Yorkville Advisors Global, L.P. The SEDA allows the
company to draw down funds in exchange for the issue of shares in the Company.
Under the terms of the SEDA, equity is issued at 95 per cent of the prevailing
market price over a pricing period of between 5 and 20 days. The amount of each
drawdown may not exceed 400 per cent of the average daily trading volume of
shares multiplied by the volume weighted average price on AIM for the five
trading days prior to the drawdown request.
Use of the facility is entirely at the discretion of the Company and there are
no penalties for not drawing down on the facility.
As at 31 March 2014 GBP 2.2m remains available to draw down on this facility.
Share options
As at 31 March 2014, the following share purchase options were outstanding, each
entitling the holder to acquire one common share of the Company:
2,231,000 share purchase options with exercise prices ranging from GBP 0.325 to
GBP 4.925 or C$0.576 to C$7.90 expiring on various dates up to January 2019.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements.
FUTURE OUTLOOK
The Company is currently in an advanced stage of the refurbishment, transport
and construction of the El Bote Processing Plant.
The Plant, which is expected to have begun commissioning by the end of 2014,
will have a maximum capacity to treat up to 1,500 tonnes per day of
silver-lead-zinc ore and is projected to deliver substantial cost savings
against the previous toll milling operations. With reduced operating costs, the
Company should enjoy significantly higher operating margins than would otherwise
have been achievable under previous toll milling arrangements.
The completion of the construction of the Plant will be a significant
development for the business and a critical event as the business moves towards
the execution of its long term strategy.
Forward-Looking Information:
This press release contains certain "forward-looking information". All
statements, other than statements of historical fact, that address activities,
events or developments that the Company believes, expects or anticipates will or
may occur in the future. This forward-looking information reflects the current
expectations or beliefs of the Company based on information currently available
to the Company as well as certain assumptions (including that the Company will
be able to obtain the necessary financing). Forward-looking information is
subject to a number of significant risks and uncertainties and other factors
that may cause the actual results of the Company to differ materially from those
discussed in the forward-looking information, and even if such actual results
are realized or substantially realized, there can be no assurance that they will
have the expected consequences to, or effects on the Company. Factors that could
cause actual results or events to differ materially from current expectations
include, but are not limited to, the failure to raise the necessary financing,
as well as unexpected delays in completing the transportation and refurbishment
of the El Bote Processing Plant which could lead to unexpected delays in the
start of operations and delays in the Company's mine expansion plans.
Any forward-looking information speaks only as of the date on which it is made
and, except as may be required by applicable securities laws, the Company
disclaims any intent or obligation to update any forward-looking information,
whether as a result of new information, future events or results or otherwise.
Although the Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put
on such information due to the inherent uncertainty therein.
This press release does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities of the Company in the United Sates. The
securities of the Company have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "U.S. Securities Act") or
any state securities laws and may not be offered or sold within the United
States or to U.S. persons unless registered under the U.S. Securities Act and
applicable state securities laws or an exemption from such registration is
available.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) and no stock
exchange, securities commission or other regulatory authority accepts
responsibility for the adequacy or accuracy of this release nor approved or
disapproved of the information contained herein.
FOR FURTHER INFORMATION PLEASE CONTACT:
Arian Silver Corporation
Jim Williams
CEO
(London) +44 (0)20 7887 6599
Arian Silver Corporation
David Taylor
Company Secretary
(London) +44 (0)20 7887 6599
dtaylor@ariansilver.com
www.ariansilver.com
Hume Capital, Broker
Jon Belliss / Abigail Wayne
(London) +44 (0)20 7101 7070
jon.belliss@xcapgroup.com
Grant Thornton UK LLP
Philip Secrett / David Hignell
(London) +44 (0)20 7383 5100
philip.j.secrett@uk.gt.com
Yellow Jersey PR Limited
Dominic Barretto
(London) +44 (0)7768537739
dominic@yellowjerseypr.com